'Evolution' of NEC construction contracts due in June

The NEC is a suite of standard form construction contracts created by the Institution of Civil Engineers (ICE). There have been three versions to date: in 1993, 1995 and NEC3 in 2005. NEC is the contract of choice for many of the UK government's procurement projects, including 2012 Olympics-related projects and Crossrail. It is also increasingly being used in IT procurement, as well as infrastructure.

Two new contracts will be introduced as part of the new suite in response to "market demands and industry developments". These are the NEC4 Design, Build and Operate contract (DBO) and the NEC4 Alliance Contract (ALC). A draft version of the second of these will be published first for consultation.

Construction law expert Laura Tetlow of Pinsent Masons, the law firm behind Out-Law.com, said that early indications were that the changes would be positive.

"Described as an 'evolution not revolution', the indications are that the changes will enhance and improve NEC3, but there are areas where improvements might have been anticipated which it seems are not on the agenda," she said.

"The teaser received from NEC would suggest that the NEC4 has been developed with reference to use and industry best practice, to make the suite of contracts even more user-friendly, flexible and collaborative. The precise changes to the risk balance of the suite remain to be seen, as does the effect these changes will have on the length of 'Z clauses' that so often go hand in hand with the NEC3, but all signs seem to point towards an even more pro-active project management approach, with swifter resolution of issues and greater participation by the contractor in the outcome of the project."

DBO contracts are used where responsibility for the design, construction and operation or maintenance of a project is procured from a single supplier. The NEC4 version will allow parties to include a range of different services to be provided before, during and after engineering and construction works are completed. The NEC4 ALC is the first multi partied NEC contract created to support clients who wish to fully integrate the delivery team for large, complex projects where risk and reward is shared, and will initially be published in consultation form.

Proposed changes include deemed acceptance of the programme where there is failure to respond by the project manager, an end date for valuing defined cost and "reasonable skill and care" as the default design obligation.

NEC4 will incorporate new core clauses covering topics such as confidentiality, assignment, ant-bribery and additional compensation events. These are some of the most common omissions from the NEC3 suite, which often have to be covered by the contracting parties in the form of additional 'Z clause' amendments.

New standard 'secondary' options have also been developed. These include a 'design and build' option; options to support early contractor involvement and building information modelling (BIM); and an option to incorporate collateral warranties. A dispute avoidance option has also been developed, which will allow parties to refer disputes to a pre-appointed Dispute Avoidance Board (DAB) where the adjudication provisions of the UK's Housing Grants, Regeneration and Construction Act do not apply.

NEC4 will be available to purchase following a NEC Annual Users' Group seminar on 22 June.

NEC contracts general manager Rekha Thawrani said that the new contracts were "shaped by the needs, experiences and feedback of our users".

"We believe NEC4's diverse range of definitive end-to-end project management contracts will empower users to deliver projects on time, on budget and to the highest standards now and in the future to the benefit of both industry and society," she said.